Japan slipped back into a technical recession

May 19/2011

(ICIS) -- Japan slipped back into a
technical recession as the earthquake and tsunami of 11 March significantly
dented production and exports of the world’s third largest economy. Its economic
output fell by 0.9% quarter on quarter, with the annualised rate of decline at
3.7%, according to data from Japan’s Cabinet Office released on Thursday. Most
economists had been expecting a 2% year-on-year GDP contraction for the March
quarter. A technical recession is defined as two consecutive quarters of
shrinking economic output.

With its industries still trying to cope with a power shortage more than
two months since the disasters that shoved the country into a nuclear crisis,
Japan’s economic performance this quarter may be worse than the first
quarter’s.

The crisis at the quake-damaged Fukushima Daiichi nuclear power plant is
regarded to be on par with the worst nuclear disaster on record at Chernobyl,
which occurred 25 years ago.

Among the biggest casualties of the power shortage is the automotive
sector, which is a major end-market for petrochemicals.